When the marginal benefit equals the marginal cost of the last unit sold in a competitive market,

Question

Quizplus · Accepted Answer

When the marginal benefit equals the marginal cost of the last unit sold, it indicates that the market has reached an equilibrium point, and an economically efficient level of output is being produced. This is because the competitive forces of the market ensure that the price of the product reflects the true cost of production (marginal cost), as well as the value that consumers place on the product (marginal benefit). Therefore, producing any additional units beyond this point would result in a net loss for both producers and consumers.

When the Marginal Benefit Equals the Marginal Cost of the Last